Acting under a Power of Attorney + Attorney’s Fees
An attorney-in-fact is the principal for an individual under a validly executed power of attorney. The term is confusing to some and can be used interchangeably with the word agent. The law governing power of attorney documents is somewhat similar to agency or contract law. In order to determine your rights and responsibilities as the attorney in fact, you will first want to thoroughly review the power of attorney form with an attorney.
Recently, I had a client come into my office who was concerned about the mental capacity of their parent. Further, this client felt that their parent’s financial rights were being violated. Fortunately, the parent had executed a power of attorney and given broad powers to my client. This client was particularly worried about my legal fees and whether they, the attorney-in-fact, would be ultimately responsible. My client was coming to see me on behalf of their incapacitated parent and my legal services were for the direct benefit of the parent.
Any time there is an existing power of attorney, I will always closely review the document to see exactly what powers the attorney-in-fact was given. Luckily, the parent of my client had given them the express power to hire professionals, such as attorneys or accountants, on behalf of the principal. Since I was performing services which were for the ultimate benefit of the principal (parent), I had no problem telling my client that the parent should ultimately pay my fee.
Another important clause in a power of attorney is the clause that says that the attorney-in-fact can be reimbursed for expenses made on behalf of the principal. Under the above scenario, I would be a bit more concerned about the payment of legal fees if my legal counsel was for the benefit of the attorney-in-fact only.
In practice, the payment of attorney’s fees can become a sticking point, particularly where the principal is still cognizant of their finances. In these instances, I try to work with my clients to determine how to best avoid conflict regarding money in the future. Obviously, it is in everyone’s best interest to avoid a conflict with family members.
Remember, it is always important to have transparency if you are acting as the attorney-in-fact for an individual. You will want to avoid expenditures which may seem to benefit yourself only or which may be viewed as unreasonable. In many instances, hiring an attorney on behalf of the principal is reasonable. Many power of attorney documents give the agent the ability to hire professionals or to litigate on behalf of the principal. Every case and power of attorney form is different. If you have questions, contact my office to discuss your particular legal needs or concern.
Ryan C. Young | Estate Planning & Guardianship Attorney | Richmond, Virginia